Unit - I: Introduction: School of Management

Sri Krishna College of Technology
School of Management
UNIT – I : INTRODUCTION

Topics to be covered
• Emerging Concept of CRM
• Evolution and Benefits
• School of Thoughts of CRM,
• Customer Relationship Bonding
• CRM framework
• Life time value of Customers
Key Terms
• CRM
• Evolution
• School of thoughts
• Customer relationship bonding
• Zero defection
• Life time value of customer
Who is customer?
• Webster defines “ one that purchases a commodity or

services”
What is Customer Relationship Management ?

• Customer relationship management is a broadly recognized,
widely-implemented strategy for managing a company’s
interactions with customers, clients and sales prospects. It
involves using technology to organize, automate, and
synchronize business processes—principally sales activities,
but also those for marketing, customer service, and technical
support.
• Crm is an approach to managing a company ‘s interaction with

current and potential future customers.
• CRM approach try to analyse data about customer’s

history with a company, to improve business
relationships with customers. Specifically focusing on
customer retention and ultimately to drive sales
growth.
Objectives of CRM
• To simplify marketing and sales processes

• To provide better customer service
• To discover new customer and increase
customer revenue
• To cross-sell products more effectively.
Components of CRM
• Building and leveraging a sufficiently robust customer

or prospect database.
• Identifying target customer or segment.
• Defining & delivering against the prescribed customer
experience
• Defining and measuring desirable business outcomes
Three phases of CRM
• Acquiring New Relationships

• You acquire new customers by promoting your company’s
product and service leadership.
• Enhancing Existing Relationships
• You enhance the relationship by encouraging excellence in
cross-selling and up-selling, thereby deepening and
broadening the relationship.
• Retaining Customer Relationships
• Retention focuses on service adaptability – delivering not
what the market wants but what customers want.
Ingredients of CRM
Business
Report
Customer
Alalytics Care
Work flow CRM HR

automation System Management
Sales force Lead

automation Management
Marketing
History of CRM
B&S RM CIMS CRM e-CRM
Time
line
Late Early Mid 90’s 2002 -
80’s 90’s Future
B&S – Buying & Selling

RM – Relationship Marketing
CIMS – Customer Information Management Systems
CRM – Customer Relationship Management
e-CRM- A subset of CRM that focuses on enabling
customer interactions via e-channels (The web, email
and wireless)
Potential Benefits Of CRM

• Develop better communication channels
• Collect customer related data
• Increase customer satisfaction
• Identifying new selling opportunities
• Increase profit margin and revenue
• Better stand against global competition
Types of CRM
Type Characteristic
Strategic CRM Customer-centric, based on acquiring and maintaining

profitable customers.
Operational CRM Based on customer-oriented processes such as selling,

marketing, and customer service.
Analytical CRM Based on the intelligent mining of the customer data

and using it tactically for future strategies.
Collaborative CRM Based on application of technology across organization

boundaries with a view to optimize the organization and
customers.
Schools of Thought on CRM

• 1. The Anglo-Australia Approach,
• 2. The Nordic Approach, and
• 3. The North American Approach.
1. The Anglo-Australia Approach
Quality
Management
Service Customer
Marketing Relationship
Concept Economics
Relationship Marketing
Anglo-Australian Approach of
2. The Nordic Approach

Interactive
Network
Theory
Service Customer
Marketing Relationship
Concept Economics
Nordic Approach to Relationship
Marketing
The North American Approach
• Organisational
Environment
Buyer
Relationship Manager
North American Approach to Relationship Marketing

Levels of relationship strategies for bonding

• Level 1 (Financial Bonding)
1. Volume and frequency rewards
2. Bundling and cross selling
3. Stable Pricing
• Level 2 (Social Bond)

1. Continuous relationships
2. Personal relationships
3. Social bonds among customers
• Level 3 ( Customization Bonds)

1. Customer Intimacy
2. Mass customization
3. Anticipation / Innovation
• Level 4 (Structural Bonds)

1. Shared processes and equipment
2. Joint investments
3. Integrated Information systems
Customer Defection
• A defection occurs whenever a customer
switches to competitor.
• Customer Defection is the rate at which
customer defect or stop the useage of the
products of the company.
Types of defectors
• Price Defectors
• Product Defectors
• Service Defectors
• Market Defectors
• Technology Defectors
• Organizational Defectors
• Physical Defectors
Zero Defection
• Managing for zero defections requires a
mechanism to find customers who have ended
their relationship with the company or about to
end it.
• Company have to know which customers are
profitable.
• They must research and understand what their
customer defection rate is.
• They must also know the value of their
customers in the long run.
Customer Retention
1. Review of mission statement
2. Research your customer base
3. Measure customer defection rate
4. Stay in front of customers
5. Take the extra mileage
6. Create a proprietary way of communicating or
servicing customers
27
Framework for building CRM Strategy
• Switching
• Satisfaction
• Trust
• Commitment
• Loyalty
28
Market Share Vs Share of Customer

• Chasing wallet share is getting a loyal
customer base.
• It’s 6 times easier and cheaper to get an
existing customer to buy from company again
than it is to get a new customer (Market Share)
Life time value of customer
• Customer Lifetime Value (CLV)

• Lifetime Customer Value (LCV)
• Lifetime Value (LTV)
Frequency Measures how often the customer

has interacted with the company for products or
service offerings.
30
CASE STUDY
A major cellular service provider, AIRTEL, hired the service of synergy marketing,
an agency specialized in devising the loyalty programmes, to prepare an innovative
customer loyalty programmes. The initiatives sought to improve the customer
acquisition and retention rates of the cellular phone customers, in a market of fierce
competition. The programme implementation calls for an accurate tracking of the
customer behavior using control groups – customers like those in the loyalty
programme who were not offered membership in the programme. By comparing the
behavior of the customer in the loyalty programme with those not in the programme, the
financial impact of the loyalty programme could be very precisely determined. Since,
the programme is not going to be advertised, but informed through the mail to specific
customers, a perfect “blind test” of loyalty programme effectiveness can be created in
the cellular market.
Questions
1. You have to prepare a communication plan, sample selection, design of the
programme and data analysis approach to help synergy marketing.
2. Prepare separate plans for pre-paid and post-paid customers. ****
Learning Outcome
• Able to understand the meaning of CRM
• To create insight and new learning in the area
of customer relationship management..
Topics to be discussed in Next Session

1. CRM in Services
2. Product Market
3. Target Marketing
4. Marketing Automation

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Sri Krishna College of Technology

Sri Krishna College of Technology

• Webster defines “ one that purchases a commodity or

What is Customer Relationship Management ?

• Crm is an approach to managing a company ‘s interaction with

• CRM approach try to analyse data about customer’s

• To simplify marketing and sales processes

• Building and leveraging a sufficiently robust customer

Three phases of CRM

• Acquiring New Relationships

Work flow CRM HR

Sales force Lead

B&S RM CIMS CRM e-CRM

B&S – Buying & Selling

Potential Benefits Of CRM

Strategic CRM Customer-centric, based on acquiring and maintaining

Operational CRM Based on customer-oriented processes such as selling,

Analytical CRM Based on the intelligent mining of the customer data

Collaborative CRM Based on application of technology across organization

Schools of Thought on CRM

1. The Anglo-Australia Approach

2. The Nordic Approach

The North American Approach

North American Approach to Relationship Marketing

Levels of relationship strategies for bonding

• Level 2 (Social Bond)

• Level 3 ( Customization Bonds)

• Level 4 (Structural Bonds)

Framework for building CRM Strategy

Market Share Vs Share of Customer

Life time value of customer

• Customer Lifetime Value (CLV)

Frequency Measures how often the customer

Topics to be discussed in Next Session

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